The $1500 doesn't go to the customers, it goes to the courts. It's effectively a fine that a customer can arbitrarily impose on a company.

But the customer has to pay it back if the lose the lawsuit, correct? If so then it’s absolutely fair.

"this could definitely get ugly for companies that misbehave"

It doesn't just have to be companies that misbehave. If you don't like your competitor, maybe you'll sponsor that $250 per user to allow their userbase to throw arbitrations at them.

You can burn your competitor down at a ratio of at least 1:5 if you do something like this. If you take some fees for every case you win or that ends up settling, the ratio will be far better than 1:5

The arbitration system as it stands is a tool that allows anyone with enough money and intention to smite any company by pulling together unhappy users and paying arbitration fees for them.

If only companies had a way to escape the arbitration system... oh wait, they self select this system even though there's nothing forcing them to !

Arbitration is a tool, but it's totally unfair to say it's used by anyone else than the company choosing it.

Not allowed

Yes, when you file an arbitration against a company, regardless of how legitimate your filing is or how likely it is to be thrown out of court, that company is out at least $1000. If you wanted, you could pull together 10,000 HN users to file arbitrations, and HN is going to be hit with a $10M hammer regardless of whether there is any legitimacy to the claims.

I believe the amount varies state to state, but is generally over $1000

Should have thought of that before you added a mandatory arbitration clause to your contracts.

If so, why not just remove the arbitration clause?